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Cities can cost effectively start their own utilities

kevin.burke.dev

401–410 of 411 posts

Re: Cities can cost effectively start their own utilities

#401

Earlier quoted context omitted.

> If you find that premise highly questionable produce a cogent explanation for why real wages have been flat as a fucking strap for the last 40 years despite massive gains to GDP. Cost disease induced by regulatory capture and a massive housing shortage induced by zoning regulations. > Once you've cleared that hurdle your next task is justifying the current massively skewed (and worsening) income distribution in the…

> Cost disease induced by regulatory capture and a massive housing shortage induced by zoning regulations. Ish. While regulatory capture is at the heart of most of the truly ass outcomes attributable to capitalism it's comical that an attempt would be made to assert less government oversight would in some way be beneficial. What, are we pretending the last several decades of blissfully ignored potential anti-trust ca…

> What, are we pretending the last several decades of blissfully ignored potential anti-trust cases, questionable mergers, etc. aren't the direct result of captured legislators being told to just sit on their hands?

Regulatory capture isn't just industry capturing the government so they can avoid regulations. They capture the government so they can control the regulations, and then use them to exclude competitors by increasing regulatory barriers to entry.

It's pretty hard to sustain a monopoly in a market with low barriers to entry because the entry cost is lower than the prevailing prices, and new entrants don't sell to the monopolist unless they're offered more than they could make from staying in the market, which is in turn more than the cost of entry. So entering the market stays profitable because you either make money by selling to customers or you make money by getting acquired. But the monopolist doesn't actually have an unlimited supply of money for acquisitions, so new competitors keep popping up until they run out of cash and then one of them sticks, or one of them is e.g. a co-op that isn't interested in selling.

To prevent this the monopolist needs the market to have higher barriers to entry. One way of doing this is to become so vertically integrated that new entrants would have to reproduce the entire supply chain to enter the market, and this is the case where you actually need antitrust enforcement, but it also isn't the common case. And it's hard for anyone to get a vertically integrated monopoly to begin with without the common case, because it's hard to monopolize the vertical before you have a monopoly in the original market.

The common case is the monopolist gets the government to pass laws making it more expensive to enter the market until new entrants are deterred.

> Offshoring manufacturing and permitting AG conglomerates to bankrupt the majority of family farmers has resulted in rural communities being stripped of economic opportunities which caused a flood of economic refugees into high cost residential markets. Proof: pundits screech about a lack of affordable housing when ~8 million units sit unoccupied, many outright abandoned.

This is just "demand is not always in the same place as it was before", it's only a problem if you constrain supply from increasing in the places where the demand has moved. This is the same reason you can have unoccupied units and a shortage at the same time, when the units aren't in the same location as the demand. The vacancy rate in e.g. Manhattan is at record lows.

Also, the shortage is by significantly more than 8 million units.

> when zoning changes are made to permit the kind of multi-story mixed use structures that are hyped as a solution to the housing crisis what happens is they get built, the local market gets an influx of condos that nobody who lives in the area can afford and nearby housing increases in cost (a net reduction in affordable housing), literally the exact opposite of the effects advertised.

This is the "induced demand" theory, which is rubbish. There is more demand for higher density areas than there is supply, so the price is high. If you increase the density of an area, you satisfy some of the demand, not only by creating that housing but by increasing the density of that area, which makes it more attractive because it can now sustain more local shops etc., so more people also want to move into the directly adjacent existing housing.

This does decrease the cost of housing, it's just that the housing that becomes more affordable isn't the housing directly adjacent to the new housing. It's in the place people left in order to move there.

What's happening is essentially this: Suppose you have areas with density levels 1, 2 and 3. Level 3 is the most dense, most desirable and most expensive. You increase the density of a level 2 area so it becomes a level 3 area by building more housing. The price of all three density levels goes down across the region, because there are now more level 3 areas available, so you don't have to bid as high to live in one, and some people move from level 1 and 2 areas to the new level 3 area, which makes more supply available there too. But that specific neighborhood used to be level 2 and is now level 3, so it, unlike the region as a whole, can increase in price, because the new level 3 price might still be more expensive than the old level 2 price.

And even that can be solved by building enough level 3 housing across the region so that the cost of level 3 housing falls below the previous cost of level 2 housing, but for that you have to build even more.

> This phenomenon is also driving up the cost of performing clinical trials as these outfits are savvy enough to intentionally target practices that perform trials. The resulting increase in fees to run a clinical trial are so steep they trigger fraud warnings in industry benchmarking software.

To take one example, the US requires separate clinical trials from the ones already done in Europe. There is no legitimate reason to even be doing them a second time, the European ones should be accepted for approval for sale in the US, but they're not. Because the incumbents like it that way, because it reduces competition and they own the regulators.

Another solid example is the entire concept of certificate of need laws. It's quite possibly the most naked example of anti-competition legislation in existence.

> Anyway, given we're the only industrialized nation who's healthcare system isn't entirely controlled by the government this claim seems pretty rich.

There are several industrialized countries with private healthcare systems that are all more efficient than the US system. The US system is notoriously corrupt and inefficient because the incumbents use regulation to inhibit competition.

Re: Cities can cost effectively start their own utilities

#402

Earlier quoted context omitted.

Nuke had no future in Germany. The plants haven't had security maintenance in many years because it all was relaxed due to the pending shutdown, the plants were many decades old, we don't have a place to store spent fuel (unlike Americans who have ample desert space where no one is ever gonna be bothered), new fuel comes to a shocking amount from Russia, constructing new plants takes >>10 years and many billions of e…

The nukes not having a future in Germany is completely down to the Green Party and their pathological obsession with killing nuclear power. They organized and succeeded. Where was the opposition? Is the entire German environmental movement beholden to the Green Party?

The final decision to shutdown the nuclear plants happened under a conservative CDU-led government.

And even it they don't seem to have memory now of doing so, I applaud them for this specific decision back then.

Re: Cities can cost effectively start their own utilities

#403
post #180

Earlier quoted context omitted.

Possibly due to overregulation. The power company wants to cut corners. The government wants to prevent that. So there is constant lawfare between governments and highly regulated companies, with neither really caring if it leaves the customer out of pocket (since regulators can blame the bills on the company). The company outsmarts the regulators so the regulators carpet bomb them with so much regulation that they h…

[flagged]

Please don't cross into personal attack in HN threads.

https://news.ycombinator.com/newsguidelines.html

Re: Cities can cost effectively start their own utilities

#404
post #204

PG&E should have been liquidated in bankruptcy and the physical assets taken by the state, with regional public utilities created from them.

Bankruptcy would not help because you’d still have some entity managing the entire coverage area. The gain comes from creating a market for lemons.

No, give each county (or neighboring group of them) the opportunity to form a local utility and take over the mgmt. local municipal utilities have a really good track record.

Re: Cities can cost effectively start their own utilities

#405
post #326

Earlier quoted context omitted.

Services subject to natural monopolies are good candidates for being run cooperatively, by / on behalf of the market participants, so that there is not the incentive to extract rents via market power. Government-run may be practical from e.g. a fundraising perspective, but these services could be run wholly privately as co-ops.

In theory having the government run it should have the same effect. In practice what happens is that voters don't separately elect the utility's board and then the mayor gets elected on the basis of some school or tax issues and allows the government-run utility to become wasteful or corrupt. What could be interesting is to have the local government found a co-op, i.e. they issue a bond to do the build-out and then h…

Easier said than done these days. We had a coop managing out drinking water with local government support. Being a coop excluded them from grants and eventually the board burnt out and gave up. Local government now operates the thing - you'd think they'd be accountable to voters but they can only get grant money with strings attached. They can repair a few pipes only if they install chlorination that no one wants and will add more maintenance costs because of pressure from health and safety - the provider must guarantee water is safe at the end point so boiling water, which everyone does here, is no longer acceptable apparently. There isn't a big enough population that increasing the cost of water would make a difference.

All that to say, voters here do care about utilities, and the coop solution worked for about 25 years iirc but it can't work in today's "one solution fits all" regulatory context anymore, at least where i live. Things are far from that simple in practice.

Re: Cities can cost effectively start their own utilities

#406
post #224

Earlier quoted context omitted.

I would argue that if something may not fail you can only pretend to privatize. You only privatize the profit during the good times. Our railroads paid a nice 300m in divident every year then corona came, people were told to stay home. You can guess who had to pay for the lack of travelers. The most silly are ISP's. The prices in each country depend on how much people can pay and what you get for it is rng

> I would argue that if something may not fail you can only pretend to privatize. You only privatize the profit during the good times. You can straightforwardly privatize things that can't be allowed to fail. Power generation is a decent example: If you have a hundred independent generating companies that all sell into a live auction market, they have to compete with each other which keeps prices down and the market…

> You can straightforwardly privatize things that can't be allowed to fail.

What are some examples of successfully privatized utilities?

Re: Cities can cost effectively start their own utilities

#407
post #393

Earlier quoted context omitted.

Damned if you do, damned if you don't. I didn't get to bid in an auction. Providers bid until they had enough then the price was fixed based on the most expensive source. We also designated a windy chunk of government land next to my city to private wind energy. Besides land it needed a bit of subsidee to spin them up. Big turbines happened that provide enough power to run the city. Not that the city didn't have the…

> The market was very good at increasing profit when demand was larger than supply. That's what it's supposed to do. Then in the absence of regulatory barriers to entry, new suppliers enter the market to capture those profits, until the profits aren't so big anymore because there are more suppliers. One of the things that messes people up here is that they want consistency but don't want to pay for it. You have a com…

Yes, markets are suppose to kick you when you are down.

My gut says it is like needing for example a car. You could rent or lease or you could buy one in cash on on credit. Each choice makes sense to someone. If it is to be a collective choice/deal it should be cheaper and I see no reason why it can't offer the same options. We have this weird tendency to shove all collective arrangements in governments boots where we know the outcome will be something stupid, turn into something ridiculous or both.

I really want to see gov processes strictly defined. Then we can have the government set up entirely independent bodies that strictly follow their charter. Ideally it pays no taxes, no one works there, no one owns it. I might even like blockchain for this purpose. We want 1234 new lease contracts for 2026, any company may bid, customers press accept. The one most accepted gets to provide the [proverbial] cars.

It seems doable.

Re: Cities can cost effectively start their own utilities

#408

Earlier quoted context omitted.

if your needs are fairly basic, sure. As soon as you add modernity, solar and storage for every house/region is cost-prohibitive.

The average residential electricity rate in CA is $0.34/kWh. In these problematic locations, I'd expect the cost to be even more than this. Ground mount PV would be suitable here, so there would not be great problems with scaling. I think a PV + battery system should be competitive regardless of "modernity", whatever it was you meant by that. To put numbers on it: for a 12 kW system in Chico, CA (a location at ~40 de…

while your general point is valid, the problem with simulations and estimates is that they have some severe caveats.

The most significant is that modernity comes with immense demands on reliability and capacity. The solar estimates are based on averages. There will absolutely be times when your solar and battery system runs out of power. What then? What if you decide to buy an EV? Can you depend solely on solar?

You cannot replace the grid, no matter what the simulations tell you. The whole reason the electricity grid was created in the first place was to solve problems of local resource constraints.

Re: Cities can cost effectively start their own utilities

#409

Earlier quoted context omitted.

this is entirely wrong. There is no world in which rural areas can substitute the power grid with anything you described. It is not possible - in the absolute sense - to match the power grid's reliability and stability with a bunch of local solutions. The cost is another matter but take Canada - the lowest electricity rates in the OECD. The local solution to solve local problem absolutely works, but that is not what…

You..clearly know nothing about power grids, because utilities are deploying batteries precisely because they increase reliability an ease maintenance. And microgrids exist all over the US - a bunch are in Alaska and other very rural areas. Those communities have started adding battery storage systems to account for sudden load changes their generators can't handle, generator failure or maintenance, and so on. Withou…

i'd be careful telling someone that they don't know about power grids.

All the microgrids you describe provide basic needs. None power serious industry anywhere.

Batteries are a good solution for certain situations, not as a fix-all. All the batteries in the world can power a large power system like California or Quebec for minutes. That's right - minutes.

Re: Cities can cost effectively start their own utilities

#410
post #102

Earlier quoted context omitted.

Right? I once ran a private company where there primary shareholders (who didn't work inside the organization) used to complain about the margins because they liked to calculate profit margin _after_ taking significant dividends.

Your instance of an employer screwing you has no relation to an audited publicly listed business that has to not only follow accounting standards and is subject to the SEC, but also cannot sell their product unless the price is approved by the state.

Fair. But if you assume creative accounting only applies to private organizations I have a bridge to sell you.
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